Kimberly Carleson’s Post

With new fiduciary standards in place under the Consolidated Appropriations Act, it is important for plan sponsors to be diligent when managing their health care plans. A federal law enacted three years ago is adding new fiduciary responsibilities for plan sponsors as that law and other federal regulations are driving risks and opportunities around health plans. Under the Consolidated Appropriations Act of 2021, plan sponsors are required to attest that their fees for health care plans are fair and reasonable for the services provided. As a result, it is vital that plan sponsors apply a fiduciary process, as required by the Employee Retirement Income Security Act, for their health care plans… After asking the room of plan sponsors whether they had a formal committee set up for their health and welfare plans, only three people raised their hands. https://lnkd.in/gwfzrKY7 With more lawsuits expected, Greenleaf said it is in sponsors’ best interest to establish a fiduciary committee for their health plan, if they have not already, because this helps establish a process around gathering information and deeming costs reasonable. She said it is important to make sure that fiduciary insurance covers the health care side of the plan, not just retirement, because some polices do and others do not. “Forming the committee is important because with the J&J [lawsuit], they didn’t have a committee [and] by default, they named individuals in the lawsuit, and they were all HR people,” Greenleaf said.” Plan sponsors - Have you set up a formal fiduciary committee for your plan? #fiduciaryresponsibilites #employeebenefits

I’m particularly fond of the embedded article that talks about heightened fiduciary health plan standards under CAA and how many of them compare to those required with 401(k). Also, how employers can think about their new fiduciary standards and required behavior changes in the context of how they manage their 401(k) duties. Many employers simply don’t know where to begin. Certainly, demanding plan data and analytics is a great start, but even a better start is securing disclosure on parties who service the plan. This is an enlightening and often shocking exercise for most that inspires specific actions. Great quote from the piece: “In addition to the ERISA 408(b)(2) fee disclosure requirement, group health plan fiduciaries now have a better line of sight into the structure and economics of their group health plans than ever before. This insight comes in the form of a series of new disclosure requirements that require plans to obtain and publish network and out of network payment rates, and to report plan drug and service cost information to HHS. Further, the CAA now requires employers to prepare periodic reports demonstrating compliance with the Mental Health Parity rules. These new rules give employers and plan fiduciaries unprecedented leverage with their service providers through increased transparency and improved awareness of the structure and economics of their group health plans. With this greater knowledge and understanding comes more risk of criticism that an employer or plan fiduciary could have looked closer—and should have looked closer—at fees and plan design in carrying out their fiduciary responsibilities. We think these new group health plan transparency and disclosure rules will drive new litigation against group health plan fiduciaries similar to what occurred in the retirement plan industry after ERISA 408(b)(2) became effective for 401(k) plans.” So, in summary, we’re now seeing high profile breach of fiduciary duty lawsuits much like we have for the last 20 years with retirement plans. We’re also seeing disclosures shining the light of day on previously unaccountable plan contracts. In short, employers need to start acting differently lest they become the target of lawsuits and lest they lose employees to other employers who are recapturing capital expenditures from their health plans previously conveyed to third parties furnishing no value. A new day. #employeebenefits #employers #healthcare #compliance #fiduciaryduty #valuebasedcare Christine Arnold Dean Jargo Brian Klepper Chris Deacon Patrick Long Stacey Richter Stuart Sutley Christopher Gormley Steve Schutzer, MD John Rodis, MD Lisa Trumble Scott Haas Doug Aldeen Dave Chase, Health Rosetta-discovering archaeologist Al Lewis 🇺🇦 Les Wilkinson Darren Fogarty Patrick Moore Josh Spivak Justin Leader Julie Selesnick Jamie Greenleaf AIF, CBFA, C(k)P John Bass Peter Hayes Ann M. Richardson, MBA Tim Denman Ryan Parker

Employers are now prioritizing fiduciary procurement processes for healthcare plans, similar to what has been done in the ERISA retirement space over the last 20 years. This shift is far from a back-burner issue. Implementing a data-driven, fiduciary sound methodology not only enhances healthcare quality and cost-effectiveness for employees but also influences the corporate bottom line. It establishes a transparent governance process to validate decision-making.

ERISA Excessive Fee Litigation...for group health plan fiduciaries? 😶 Admittedly, these types of lawsuits are more commonly found on the Pension side of ERISA but recent legislation, that slipped through the cracks for most plan sponsors, are causing a shift of the litigator attention from pension to health and welfare plans. 🤔 This article is short and sweet explaining what the risk is and how plan sponsors can protect themselves from fines and penalties. 💵 However, it doesn't take the extra step explaining the great opportunity that exists for business leaders to use the new laws to their advantage. 🧐 Price Transparency 💥 GAG Order Prohibition 💥 Compensation Disclosure 💥 These set the framework for employers to determine the value they are getting from their benefit & insurance partners. Employers that embrace their fiduciary responsibility are able to remove the wasted spend from within their 'Plan' in the form of prescription rebates & spread pricing, as well as medical claims caused by upcoding, unbundling, and steerage by the healthcare system. 🤬 #fiduciary #cfo #hrdirector #healthcare #healthinsurance

“Inaction is the real threat” “Ignorance may be bliss, but complacency is costly.” Employers must establish governance procedures to manage their liabilities on health plans. This will lay the foundation for decision making, acting as a prudent-man rule that gives discretion to a fiduciary. Employers will need to seek out partners to help them execute the process, much like they do in the retirement space. Brokers should be prepared to engage with the committee in a new way. They will be held to a new standard, and must act in the best interest of the employer and employees. Remember, ERISA is about an unbiased, conflict-free process. Fiduciary governance will establish the process and the committee will need to adhere to and document the process. Employers need to stay informed about their health plans. If premiums are increasing, don’t depend on the person managing your claims, paying your claims, and receiving a commission from your claims to investigate it for you. Change takes commitment and hard work, but the rewards can be significant. Change brings better outcomes, superior benefits with meaningful impact and reasonable costs. #fiduciary #fiduciarylawsuits #healthcare #healthplan #employeehealthplan #selfinsured #thirdpartybillreview

I wanted to re-share this article because many employers still do not understand that the game has changed when it comes to employer sponsored health plans. Just picking a Big Name Insurance carrier and or Big Box broker won't cut it anymore. Employers need to actually know what is oging on within their plan. As the article puts it, "Ignorance may be bliss, but complacency is costly." Although the new standard for fiduciary liability with health plans was part of the CAA of 2021, many employers still do not realize the immportance. "The CAA has flown under the radar of most employers and service providers, but it is in full effect. The DOL has already started to audit plans to determine compliance." Simply put, "Inaction is the real threat."

“More than half of employees (51%) said they want fully-covered health-care premiums more than any other benefit typically covered by employers” Are you offering this? Are you looking for employer recruiting strategies? What if you could get your group health insurance costs down, stabilizing the budget, while being able to use it to recruit top team members? That’s what we do everyday at SmartCare! Working with Employers and Brokera to find creative solutions. Let’s discuss…

Employee benefits like health insurance, retirement contributions, and wellness programs not only support your team but can also offer valuable tax deductions for your business. Knowing which benefits are tax-deductible helps reduce your overall expenses and keeps your business financially healthy. The U.S. Chamber of Commerce provides a detailed guide to help you navigate which employee benefits qualify for deductions and how to maximize them. This could be a game-changer for small businesses! #SmallBusinessFinance #TaxPlanning #EmployeeBenefits #BusinessTaxDeductions #SmallBusinessGrowth #HR #Leadership #healthcare #medicine #practicemanagement

Eating your frog. Yes, that’s a strange way to start a post on yet another story about an employer fiduciary breach lawsuit, but I think that its appropriate. Employers have acted dazed and confused relative to the management of their health plans for a very long time. Suddenly, federal legislation demands their attention requiring them to secure their data and to plot a course out of dysfunctional contracting and purchasing. As we’ve pointed out here recently, most employers don’t have a clue where to begin as it relates to their health plans. Most read the news and most listen to their brokers and learn that PBM is their biggest black box in their plans and an element of their plan that seems to drive greater and greater cost and large claims. So, the PBM is the employer’s frog and many employers are trying to tackle this problem as their first big thing. In the news today is yet another big headline involving a known brand, Wells Fargo, who is being sued for breaching their fiduciary duty specific to their PBM vendor. Another reason to cause other employers to focus on their PBMs adequacy and appropriateness. Some worthwhile takeaways from this article: “That noted, the suit alleges that over the past several years, defendants “breached their fiduciary duties and mismanaged Wells Fargo’s prescription-drug benefits program, costing their ERISA plan and their employees millions of dollars in the form of higher payments for prescription drugs, higher premiums, higher out-of-pocket costs, and lower wages or limited wage growth.” The suit goes on to state that that mismanagement is “evident from, among other things, the prices it agreed to pay one of its vendors—its Pharmacy Benefits Manager (‘PBM’)—for many generic drugs that are widely available at drastically lower prices.” “The burden for that overpayment falls on both the Plan and its participants/beneficiaries,” the suit continues, explaining that the Plan itself pays most of the agreed amount from Plan assets, while Plan participants/beneficiaries pay more in the form of increased premiums and increased out-of-pocket costs. “No prudent fiduciary would agree to make its plan and participants/beneficiaries pay a price that is fifteen times higher than the price available to anyone who just walks into a pharmacy and pays without using their insurance,” the suit continues.” The pressure is rising on employers to act decisively to take control and responsibility over their plans. Eat your frog. It’ll be good for you. #employers #employeebenefits #fiduciary #pharmacy #pbm #healthcare Christine Arnold Steve Schutzer, MD John Rodis, MD Lisa Trumble Chris Deacon Peter Hayes A. J. Loiacono Stacey Richter Dean Jargo Patrick Long Raju Kattumenu Brian Klepper Dave Chase, Health Rosetta-discovering archaeologist Al Lewis 🇺🇦 Stuart Sutley Jamie Greenleaf AIF, CBFA, C(k)P Julie Selesnick Doug Aldeen Darren Fogarty Justin Venneri Tim Denman Kerry Wood Justin Leader

Many employers today are offering high deductible health plans (HDHPs) to manage premium costs and pairing this coverage with Health Savings Accounts (HSAs) to assist employees with health care expenses. Given the potential tax benefits tied to HSAs, there are strict federal laws surrounding HSA contributions. To help you understand these rules better, kindly refer to the attached document titled Health Savings Account (HSA) Contribution Rules. Thanks, William Cross